Roy Osing
31 Oct 2017

The best bet is to invest in the customers you have


If you accept the proposition that anyone who is willing to pay you for a good or service is worth paying attention to, then any customer is good your business. 

Right?

Maybe not.

Some customers produce revenue for you, but the emotional and financial costs you incur to generate it are unreasonable.

Some customers are more of a hindrance than an asset.

These are low or "no value" customers who should command an investment proportionate to their worth.

Many organizations that I have experienced have difficulty scaling the level of investment they apply to the value of the customer. They assume that "a customer is a customer" and therefore apply the same effort to satisfy each one of them.

They treat all of their customers the same way; the highest value customer receives the sale level of service, for example, as the no-value one. 

Or, they actually provide the no-value customer premium benefits that high value ones don't enjoy. 

My favourite example of this are the promotional incentives offered to lure customers away  from their current supplier. "Come to us and receive 3 months free service" or "Switch to our product and a flat screen LED TV will be yours" are commonly used offers when an organization wants to add new customers. 

The costs of acquiring a new customer are significant, and are often incurred for a customer who spends virtually nothing with their new supplier or they switch again when a better offer comes along leaving unrecoverable investments in their wake.

Furthermore there is unintended collateral damage from this type of promotion. Existing customers discover the special offer is available, but not to customers who may have been with the organization for many years and demonstrated their loyalty many times over. 

These disenchanted loyalists voice their displeasure to others and often switch to another organization they believe will treat them more fairly. 

High performing organizations invest in customers who will provide a decent return on that investment. The higher the value, the greater level attention and resources applied. 

And the more favourable treatment given. The highest value customers receive the better levels of service and any new promotional offerings. Check out The Grateful Dead who understood this.

No-value "promiscuous" customers, on the other hand, receive a no frills level of service and no special treatment.

Every organization has limitations on the resources they have available for their customers. 

You can't afford to be all things to all people even if they are your customers. It's just not a responsible thing to do.

No two customers are alike; no two customers create the same economic value for you.

Determine the ones who make your life worthwhile.

Focus on THEM; leave the "bad ones" for someone else to chase.





Roy Osing (@royosing) is a former President and CMO with over 33 years of leadership experience covering all the major business functions including business strategy, marketing, sales, customer service and people development. He is a blogger, content marketer, educator, coach, adviser and the author of the book series Be Different or Be Dead
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Nov 23, 2017 External
Tracey,
Thanks very much for the comment. Please visit me at bedifferentorbedead.com to see other blog articles on similar subjects (and subscribe if you want regular updates 😃)
Cheers, Roy
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Nov 23, 2017 External
Tracey,
Thanks very much for the comment. Please visit me at bedifferentorbedead.com to see other blog articles on similar subjects (and subscribe if you want regular updates 😃)
Cheers, Roy
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Nov 15, 2017 External
How so very true! Many organizations miss this point. The customers that create economic value are key to success! For every one you lose you need to onboard 3 new ones to fill the revenue gap!
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